Nigeria issues lawsuit against major international bank JP Morgan while $85m recovered in proceeds of the OPL 245 deal

The Federal Republic of Nigeria has issued a billion-dollar lawsuit in the
English High Court against JP Morgan, the bank which handled the transfer of
$1.1 billion from Shell and Eni to the former Nigerian oil minister Dan Etete’s
company Malabu Oil and Gas. Nigeria alleges in their claim, which was quietly
filed in November, that JP Morgan had been “grossly negligent” in their role as
a banker to the previous Nigerian Government.

Nigeria alleges JP Morgan “could and should” have done due diligence to
discover the deal involved the “misappropriation” of up to $1.1 billion from state
coffers. The claim asks for the bank to repay the $875 million paid to Malabu,
plus interest, and to account for the rest.

Asked to comment on the case JP Morgan told Finance Uncovered “The firm
considers the allegations made in the claim to be unsubstantiated and without
merit.” JP Morgan has until March 2018 to file a defence. The money at stake
was the proceeds of a 2011 deal agreed by the oil giants Shell and Eni with the
Nigerian Government and a company called Malabu Oil and Gas which was
controlled by former oil minister Dan Etete. While in office Etete had awarded
a valuable oil license for an offshore oil block to his own company. In April
2017, Global Witness and Finance Uncovered revealed that Shell executives knew that
$1.1bn they paid for OPL 245 would go to Dan Etete and was likely to be used in
a vast bribery scheme. For years, Shell claimed that it only paid the Nigerian
Government. But now Shell has changed its story and acknowledged it had dealt
with Etete, via his front company Malabu.

Dan Etete was also convicted of money laundering in France in 2007 over
bribes he received from a Swiss oil company.

Under the 2011 deal, constructed by Shell and Eni with Nigerian
officials now accused of corruption by law enforcement, $1.1bn was intended to
be transferred to Malabu through JP Morgan accounts opened by the Nigerian
officials. Nearly $300m was however halted by claims in English and American
courts from middlemen who claimed to be owed commissions. $800m was transferred
to accounts belonging to Malabu Oil and Gas rather than the Nigerian
government.

Attempts to transfer the money to Malabu were fraught with difficulties.
BSI Lugano, a Swiss bank, rejected the payment from JP Morgan, citing Etete’s
money-laundering conviction. In August 2011, JP Morgan then made a second
attempt via a Lebanese bank to pay the money to Malabu, but this too was
rejected. However, a fortnight later the bank was able to transfer the money in
two tranches of $400m to Nigerian bank accounts set up by Dan Etete.

The claim follows the successful recovery in November 2017 by the
Nigerian government of US$85 million from the deal frozen in the UK at the
request of Italian law enforcement.

Nigeria’s solicitor general, Dayo Apata, attended the asset recovery court
hearing and said: “We are very happy about this ruling. It has been a long road
but there is light at the end of the tunnel.”

Britain’s commitment to tackling high-end money laundering through the City of London should be under serious scrutiny when a major bank allows an $800m bank transfer from a government account to a convicted criminal.
- Simon Taylor, Global Witness

In 2016 the Nigerian Economic and Financial Crimes Commission charged Shell’s Nigerian subsidiary and Italian oil giant Eni with conspiring to commit “official corruption”. Nigerian authorities have also charged former Nigerian Justice Minister Mohammed Adoke and former Oil Minister Dan Etete with money laundering for facilitating the payment to Etete. The case against Etete and Adoke, who are at large, is pending.

The civil claim against JP Morgan comes just as an Italian court has ordered a criminal trial on the oil deal, which will be the largest corporate bribery trial in history. Two of the world’s largest corporations and their senior executives will face trial in Spring 2018: Shell, Eni, Eni’s Chief Executive Officer Claudio Descalzi, Malcolm Brinded CBE, former Executive Director for Upstream International at Shell together with other former Shell executives.

"Britain’s commitment to tackling high-end money laundering through the City of London should be under serious scrutiny when a major bank allows an $800m bank transfer from a government account to a convicted criminal. The Nigerian people were failed in this case not just by their elected officials but oil companies and bankers who collaborated in a theft of at least a billion dollars. JP Morgan owes it to the Nigerian people to explain their actions and make the situation right," said Simon Taylor, co-founder of Global Witness.

Global Witness, Re:Common and The Corner House together with Nigerian
group HEDA have campaigned to expose the corruption around the OPL 245 deal for
several years.

Lanre Suraju of HEDA said, “The exploits of fantastically corrupt politicians
would not be possible without international financial institutions
collaborating or turning a blind eye. It is vital that they are held to
account.”

Nick Hildyard of the Corner House said, “Nigeria is right to try to seek
justice in this case from all parties involved and tackle the ‘fantastic
corruption’ that the Global North promotes and benefits from.“

In December 2016 money laundering charges were filed by the Nigerian
law enforcement against Dan Etete and the former Nigerian Attorney General and
Justice Minister Mohammed Adoke. In a statement in December 2016, Mohammed
Adoke said “I hope to at the appropriate time make myself available to defend
the charge for what whatever its worth,” he also emphasized that he did not
benefit from the deal, which he said saved the government from a breach of
contract suit in which Shell was claiming $2 billion. He called the charges
"orchestrated plans to bring me to public disrepute in order to satisfy
the whims and caprices of some powerful interests on revenge mission." The
full statement from Mohammed Adoke is available at http://thenationonlineng.net/malabu-will-come-defend-adoke/